Contents Of Ksh156 Billion Loan World Bank Offered To Kenya
This follows government efforts to tackle liquidity pressures, depressed investor confidence, and limited capital inflows that had caused a rapidly depreciating shilling.
Prudence Murithi 
On Thursday, May 30, the World Bank approved the first of three budget support packages for Kenya worth $1.2 billion (Ksh156 billion) to address short-term fiscal pressures and accelerate green policies.
According to a statement from the World Bank, the new funding, part of the Kenya Fiscal Sustainability and Resilient Growth Development Policy Operation (DPO), comes amidst an improved macroeconomic environment.
This follows government efforts to tackle liquidity pressures, depressed investor confidence, and limited capital inflows that had caused a rapidly depreciating shilling.
A building housing the World Bank. /INVESTOPEDIA
"After tackling the immediate fiscal pressures, the focus can now shift to addressing the country's longer-term challenges," said Keith Hansen, World Bank Country Director for Kenya.
The DPO will support policy and institutional reforms to enhance Kenya’s public finances, promote a more competitive and inclusive labour market, and strengthen climate action.
"The policy dialogue around this DPO has helped to strengthen the macroeconomic framework, sustain an ambitious fiscal consolidation path, and tighten monetary policy," added Hansen.
Key reforms include establishing a Treasury Single Account, wage bill consolidation, modernizing the social protection system, removing county-level distortions in licensing systems, opening the ICT sector for foreign investment, and improving access to services and jobs for refugees.
Additionally, the DPO will back Kenya's green ambitions, including increasing forest cover and leveraging climate finance through carbon credits and green sustainability-linked bonds.
Naomi Mathenge, World Bank Senior Economist for Kenya, emphasized, “For Kenya to return to moderate risk of debt distress, the government will need to maintain the fiscal consolidation path, promote export growth, enhance the country’s policy and institutional assessment to increase its debt carrying capacity, and proactively manage liabilities by focusing on concessional financing to reduce interest costs and repayment pressures.”
The initiative aligns with Kenya’s Bottom-up Economic Transformation Agenda and the World Bank’s FY23-FY28 Country Partnership Framework for Kenya.
The funding package includes an $850 million (Ksh110.5 billion) loan from the International Bank for Reconstruction and Development, a $300 million (Ksh39 billion) credit from the International Development Association (IDA), and a $50 million (Ksh6.5 billion) IDA grant for host communities and refugees.
